INTERVIEW ON THE FIELD OF TENSION BETWEEN THE FRANCHISORS AND FRANCHISEES
june 2020
IVO KEULARDS, ARCHITECT and PARTNER @XS since 2007
‘WE CAN ADD A LOT’ / THERE ARE SO MANY THINGS WE CAN ADD’
XS architects has many clients in the hospitality industry. Many of these clients work with a franchise formula. Ivo is asked about the difference between franchisors and franchisees, the tension between the two, and what role XS architects play in this.
WHAT IS THE CONCRETE DIFFERENCE BETWEEN FRANCHISORS AND FRANCHISEES?
A franchisor is the developer and guardian (would ‘manager’ be a better word?) of a formula; the head office. This head office also takes care of the (national) marketing of the catering services. A franchisee is the entrepreneur or the restaurant owner of a specific establishment (or several establishments). The franchisee pays a franchise fee to the franchisor, in the form of a percentage of sales. In addition, a marketing fee is paid.
WHO OF THESE TWO IS USUALLY YOUR CLIENT?
This differs. There are franchise formulas where the franchisor is always the client. They let us design and (re)build a building and afterwards sells the ’turnkey’ building to a franchisee. He gets the key and can start tomorrow, so to speak. Other times the franchisee is our client. Usually such a franchisee already has one or more branches and wants to add one. They have found a location (new or existing) and approach XS with the question to investigate whether the potential location is suitable for the relevant catering establishment (or they have received a tip from the franchisor). Once the potential site has been extensively researched and explored, permission from the franchisor is required to start a restaurant in this place. As soon as this permission has been obtained, further elaboration of the designs can take place within the brand standard of the franchisor.
WHAT’S THE DIFFERENCE BETWEEN ‘HARD’ AND ‘SOFT’ FRANCHISING?
Hard franchising involves a formula in which there is little room for the franchisee’s own input. Here, so to speak, everything is predetermined; from which appliances to use in the kitchen to which colors on the wall. You can think of McDonalds, for example. In soft franchising, the edges are a bit more blurred; the franchisee has more opportunity for input. A list of approved suppliers is sometimes used, so that the franchisee has a choice of equipment and materials. XS usually deals with clients in the ‘soft’ franchise. .
DOES XS ALSO HAVE HOSPITALITY CLIENTS WHO DO NOT RELATE TO A FRANCHISE FORMULA?
Sure, XS has those too, but they are in the minority. That’s because our greatest strength is in repetition and efficiency. That does not alter the fact that we also work for individual restaurants, such as Chinese restaurants or family restaurants.
WHAT FIELD OF TENSION CONTROVERSY? DOES XS DEAL WITH IN REGARDS TO FRANCHISORS AND FRANCHISEES?
What we often see is that franchisors and franchisees have different interests and different expectations of each other. The franchisee expects maximum support from the franchisor, in all kinds of areas; the franchisor knows a lot about many things, but has to deal with several (and sometimes very many) franchisees and cannot intervene everywhere. This also expects a bit of entrepreneurship and independence from the franchisee itself. Something else that we often see is a difference in the interpretation of the ‘brand standard’. The franchisee wants the most efficient logistical process within the restaurant with no unnecessary investments in ‘beautification’. In short, as much turnover as possible with the lowest possible costs. They therefore prefer to be ‘at the bottom’ (low end?)of the brand formula. The franchisor, on the other hand, would like the franchisee to sit more ‘at the top’ of the brand formula, with enough ideas and distinctive character. This field of tension – controversy – continuous discussion… (?) benefits the brand as a whole.
WHAT ROLE CAN XS PERFORM (IN THIS)?
XS can add a lot to the previously mentioned tensions, as we have a lot of information from the franchisor. We know how they think, what they want, what bandwidth is used, how previous experiences with franchisees went, etcetera. In this way we can spare the franchisors and franchisees a lot of work, relieve them as much as possible and mediate if necessary.
WHAT IS THE CONTRIBUTION OF XS FOR THE CLIENT? (WHAT DOES XS ACTUALLY DO FOR THE CLIENT?)
That involves a whole range of activities: site research, plot research, test fits, permit processes, drawing processes, design processes and in certain cases also construction supervision. Incidentally, the latter is often provided by a project management agency.
IN YOUR EXPERIENCES, WHAT IS THE IDEAL SITUATION BETWEEN FRANCHISOR, TASK AND XS?
That is the situation where the franchisor clearly takes the lead in brand development, in operational processes and in determining whether certain locations are suitable to build. XS Architects would ideally then be properly ‘connected’, so that we can optimally fulfill our role towards franchisor and owner!
